Contributors

Monday, 31 May 2010

As Tiffany & Co. recently announced their higher dividends, the company has achieved yet another success this week, as they beat consensus estimates in their first quarter earnings. The company was 7.5 per cent higher, well above many analyst estimates.

Burberry also checked in positivelywith increased profit, as revenue was up 6.5% per 1.28 billion pounds. How was this achieved? Burberry “slashed inventories, boosted profit margins and grew its retail operation to account for 58 percent of sales, up from 52 percent a year earlier.”

Whilst its luxury peers flourish, Richemont Group have issued a very cautious and pessimistic outlook. Although CEO Johann Rupert is known for his pessimistic ways, we are yet to find out whether Richemont Group are dulling things down for the element of surprise later in the year.

Bulgari and Luxottica tie the knot this week, in a renewed agreement for their global eyewear License. Covering the design, production and distribution of the eyewear, under the Bulgari brand, the agreement is set for ten years, ending December 31st, 2020.

Friday, 28 May 2010

Yesterday we celebrated the opening of the new Louis Vuitton store in London, but today the company suffer from having two of their advertisements banned.

The ads feature artisans delicately hand making a LV wallet and handbag. The issue? Louis Vuitton also incorporate machine work into their product manufacturing, thus misleading the viewer.

The Advertising Standards Authority explained; "we considered that consumers would interpret the image of a woman using a needle and thread to stitch the handle of a bag ... to mean that Louis Vuitton bags were hand stitched.” Louis Vuitton have no choice but to pull the campaign immediately.

It is a sad week for Hermes, as creative director of 7 years, Jean-Paul Gaultier leaves. Who will fill Gaultier’s shoes? None other, than former Lacoste director, Christian Lemaire.

Could Lemaire’s association with the Lacoste alligator be the perfect segue to Hermes? After all, they are a brand who favours the exotic and luxurious side of using alligator and crocodile in their products.

It seems the 7 year itch has come around, and we look forward to the first new collection, where all will be revealed.

Thursday, 27 May 2010

Earlier in May, Australia’s Paspaley Pearls opened its flagship boutique in the 1881 Heritage building in Kowloon, Hong Kong. 1881 Heritage opened late last year and is a Victorian architectural delight that houses many luxury brands including Cartier, Mont Blanc and Rolex. Conveniently located in Tsim Sha Tsui near the Peninsula hotel, Paspaley is certainly among good friends! The new store was opened by Nicholas Paspaley (its Executive Chairman) as well as other directors and family members. To celebrate this momentous occasion, an array of rare and exquisite pearls from the Paspaley private collections was flown in for the event, including the biggest and most spectacular round gem-quality pearl ever harvested. It is no surprise that it has shared the spotlight with the Hope Diamond at the Smithsonian Museum in Washington. This is Paspaley’s second boutique in Hong Kong, with the other store located in Central. We will be sure to drop into the new flagship when we are next in town.

When one of the world's leading luxury fashion houses opens one of their flagship stores, you can expect it to be an ornate, star-studded affair. Louis Vuitton opened their 15,000 ft London Maison store this week and hosted to a true mix of stylish celebrities.

Who was amongst the fashion pack? None other than Australian Vogue Editor in Chief, Kristie Clements, London’s it girls, Daisy Lowe and Pixie Geldof and Australia’s own Elle MacPherson, to name a few.

The store is a true mixture of art and fashion, and tactfully uses a vast amount of space. Louis Vuitton CEO Yves Carcelle stated “I think the volume is interesting…There is more room dedicated to every category of the brand.”

As expected the Louis Vuitton party brought great attention across the fashion and celebrity circuit. The Times even went so far as to describe the extravagant spending on the store, as clever and well-managed compared to the methods of Britain’s leaders in Parliament.

Wednesday, 26 May 2010

Prada have proven why they remain as one of the leading luxury fashion companies, with their retail sales up 36%.

The result comes from strong sales across the fashion house’ main markets and a clever strategy based on a direct distribution channel. It is Prada’s increasing innovation and ideal strategy that has seen such great results across the board.

Emanuel Ungaro have hired a new Creative Director- esteemed designer Giles Deacon. After recent history at Ungaro has resulted in disaster for the brand, we hope that Deacon can step up with fresh ideas and a combination of archival and innovative designs.

After actress Lindsay Lohan took a stint designing for Emanuel Ungaro, chief designer Estrella Archs departed the company. Are we surprised? Not in the slightest. The relationship of Lohan and Archs was extremely short lived and it’s quite clear why.

We hope this new path leads the label to greater heights.Image credit: ungaro.com

Tuesday, 25 May 2010

Last week we brought you news of the successful strategies used by Tiffany & Co. during the recession. This week, in the anticipation of their first quarter due this Thursday, May 27th, the company have announced they are expecting an 11% increase compared to 2009.

In addition, Tiffany & Co. have “announced a 25 percent increase in its quarterly dividend ahead of its first quarter earnings report on Thursday.” The company also announced a higher dividend per share, compared to previous results.

It seems chairman and CEO Michael Kowalski is on the right track, with the company reporting a 25% increase on their previous quarter increase of 18%- nice work if you can get it!

As Reuters suggests, an increase in consumer spending is allowing companies like Tiffany & Co. to let some of their cash free, in the form of higher dividends. As we have seen the euro falling recently, Tiffany & Co. raised its dividend, aiming for a blue egg-shell sky day!

Monday, 24 May 2010

Burberry are expected to increase annual profit by 17% by the end of May. As Reuters suggests, this increase could be largely due to the brands geographical diversity.

We recently noted that the possibility of a take over and operational improvements would be sure to further Burberry’s profits, yet we believe their continual great performance is also reliant on a steady product mix, the brands strategic marketing methods and clever distribution diversity.

As London criminals become more ‘innovative’ with their raids on luxury fashion stores, we hope that the new 15, 000 sq ft Louis Vuitton ‘Maison’ store will have security at a maximum.

Designed by famous architect Peter Marino, the new LV store is set to impress with its lavish design and the criminal gangs of London would no doubt be targeting the new store.

Both Tiffany & Co. and Prada have suffered recent attacks, which have involved gangs armed with sledgehammers, in quick smash and grab tactics. The luxury looters are not all successful however, with police making several arrests in recent weeks; will the Louis Vuitton Maison remain untouched? We certainly hope so. We wait and see…

Saturday, 22 May 2010

In another case of luxury meets art, Bulgari have collaborated with famous sculptor Anish Kapoor.

What is the result of combining the luxury of the Bulgari B.zero1 ring with the aesthetic of Kapoor’s sculptures? The answer is a stunning sculptural version of this famous ring; focusing on swirling metal in a beautiful pink gold and reflecting steel.

We welcome this new collaboration between the worlds of art and luxury.

Friday, 21 May 2010

Travellers already seek out Australia for its natural beauty, but with the recent plunge of the Australian dollar we can expect many of these travellers to return to our shores.

The SMH reported today that "the Australian dollar was in freefall this afternoon, plunging to as low as 82.56 US cents against the greenback and falling sharply against other major currencies, on renewed worries about the health of the global economy."

In a positive spin, we can expect particular interest from the People’s Republic of China in the Australian luxury goods industry, given that they suffer from incredibly high taxes in their own country.

Although it was rumoured that PPR is hurrying along to sell company assets, CEO Francois-Henri Pinault, has restated that the company is seeking to sell a large asset gradually, in order to acquire other powerful international brands.

Despite suffering from the financial crisis, PRR plan to sell at least one retail unit within the year, with the ultimate goal of refocusing the company around its two key divisions of Gucci and Puma.

Thursday, 20 May 2010

Three women have been approved to the Pinault Printemps Redoute Group board, under the direction of CEO François-Henri Pinault. The luxury industry already features a strong array of women heading up global brands such as Isabelle Guichot, the CEO of Balenciaga and Maureen Chiquet as the global CEO for Chanel.

We gratefully acknowledge François-Henri Pinault’s leadership in creating gender equality, but what is refreshing is his decision was based on the merit and valuable expertise of each nominee. Click here to read more at WWD.

As three new women join the board at PPR, its subsidiary Gucci, will see its America Inc president Daniella Vitale, leave the company at the end of May. Vitale has been with Gucci since 1999, and describes of her experience; “I am proud of what we have accomplished in the Americas, particularly during such turbulent times.”

Comité Colbert, France’s key luxury goods association will turn their focus towards the Middle East in 2010, moving away from a strong focus in China over the last year. Kuwait, Saudi Arabia and the United States Emirates will be the main targets for Comité Colbert’s international events.

Wednesday, 19 May 2010

When many companies were struggling to stay in business during the recent recession, Tiffany & Co. were sky rocketing in sales. The company not only survived during this tough financial landscape, but they prospered.

Tiffany & Co. finally released their annual report last week, documenting each successful strategy that helped the company stay afloat in the recession. Playing with the nature of scenario shopping within the recession was a key factor that seemed to influence the company’s strategy.

Namely, they lowered the prices of their fashion jewellery, which were more vulnerable to optional purchases, and to counteract, they raised the prices of their bridal jewellery, knowing well that such purchases were safely confirmed.

It should be noted that in addition to reducing advertising and out-sourcing, Tiffany & Co. also achieved a high operating margin of 22.9% to further keep the cash flowing, and those little blue boxes generating.

Social engagement, exclusivity and uniqueness are what Gen Y look out for in the luxury industry. They are not after the status symbol that comes with high end fashion, but rather this influential generation are seeking an experience that is worthy of their dedication to a brand.

LuxuryLab’s recently held ‘Generation Next Forum’ revealed that Gen Y are setting the boundaries for the fashion industry, as they constantly seek out brands that will engage with them on a new level.

As companies strive to provide a truly authentic experience, Gen Y are happy to become loyal to the brand. When a brand lacks this engagement, is where we see a difference between Gen Y and their parents; “this influential, internet-empowered generation will go out and find somebody else who does — and if that doesn’t exist yet, they’ll create it themselves.”

Tuesday, 18 May 2010

It all comes down to a unique customer experience with the latest findings by the Luxury Institute on Sony vs Apple. The results proved that both brands brought distinctive experiences to the consumer, yet Apple came out on top in the cool stakes, with users describing Apple as “truly unique and exclusive.”

Milton Pedraza, Luxury Institute’s CEO explains “Although Apple did not set out to be a luxury brand, it exhibits most of the qualities that luxury brands should strive for in the 21st century.”

Pedraza further establishes Apple as a leading luxury brand in today’s competitive market, “Apple delivers fabulous product design, unbeatable functionality, and a powerful in-store experience to consumers of all ages that many luxury brands lack. And when it comes to the ‘cool factor’ and a guru CEO, Apple is untouchable. Luxury brands could do worse than borrow a page or two from Apple’s playbook.”

We couldn’t agree more. On a local basis we see the incredible power that Apple has in the market, yet Apple’s unique relationship with other global luxury brands is where the brand sets itself apart from its competitors.

Louis Vuitton is a clear example of this unique relationship. The ever innovative brand recently created a fashion conscious iPad cover which is set to be released in New York this Friday. With the dual release of the diamond encrusted limited edition gold iPad (priced at AUD $227,794.00), we feel the exclusive Louis Vuitton alligator print iPad case would be a perfect luxury match.

With Louis Vuitton set to open a megastore in 2011 which will sit across the road from the Apple store in Sydney’s CBD, it seems this perfect match is not a coincidence. Even across the country in Perth, Apple has proven its popularity and pulling power once again, with increased interest from other premium end brands surrounding the upcoming launch of an Apple store in the heart of the city.

It will be interesting to see which other premium or luxury brands jump at the chance to be associated with Apple’s unique branding.

For many underprivileged youths, the idea of being mentored by a highly successful artist seems an impossible feat. However, with the Louis Vuitton Young Arts Project, this dream will become a reality for over 200 underprivileged Londoners.

Louis Vuitton have been the forerunners in providing essential education programs for many young people who dream big. The Young Arts Project will allow these budding artists to emerge themselves in the British art scene, with the opportunity to meet some of England’s most successful artists including Tracey Emin, Gary Hume and Michael Landy.

In collaboration with some of the major art institutions across England, such as the Tate Britain and The South London Gallery, the youths involved in the Louis Vuitton Young Arts Project will meet with artists, curators and museum experts over a period of three years.

With a rumoured investment of over $1 million in the project, Louis Vuitton remain the leaders in providing needed support for talented underprivileged youth across the world. With countless investments into charity work and artisan projects, we can expect great things from Louis Vuitton’s latest venture, as they continue to empower the future of many youths.

Monday, 17 May 2010

Last week we brought you news of tremendous sales at the semi annual Sotheby’s auction, with one blue cushion-shaped diamond selling to an anonymous buyer for 8.93 million Swiss francs. This week, we bring you news that rival Christie’s semi-annual sale saw yet another precious diamond sold at a staggering amount.

Again to an anonymous buyer, the flawless white diamond, weighing in at 40.21 carats, sold for 5.69 million Swiss francs. Christie’s focused on rare diamonds and exquisite vintage jewels at their semi-annual sale, bringing in a total of $33.9 million, with every lot in the special ‘Cartier section’ selling. Jean-Marc Lunel of Christie’s in Geneva, stated of the nature of the purchases “once again diamonds dominated the total, although signed period jewels proved the most popular in the sale.”

Although the stand out flawless white diamond didn’t beat the price of its counterpart sold at the Sotheby’s sale, these record breaking prices have revealed that the international market is back in full swing, and that high prices won’t stand in the way for some buyers who simply want pure luxury.

Rina Bovrisse, a former senior retail manager of Prada Japan, is the driving force behind the allegations. Bovrisse, alongside two other former employees are claiming that Prada Japan forced employee purchases from January 2009. A former employee claimed that retail operations manager, Satomi Oyabu, instructed staff to “purchase a minimum of $1,500 worth of products from Prada’s ‘New Arrival’ collection within the day.” Furthermore, staff had been advised that these purchases must be made as full price customer sales, in order to reach store daily targets.

It is alleged that Prada Japan began this system of unethical means in January 2009, and the company would reimburse staff purchases during this time. However, former employees claim that, only months later, Prada Japan was unable to offer reimbursements and instead, threatened to downsize the store staff.

At this stage, the allegations against Prada Japan are simply allegations, and are set to go to court within days. We can only imagine the effect that such a verdict would have on Prada consumers should these allegations be proven true.

Although at this stage we are still in the dark, it cannot be denied that Prada Japan have drastically increased their web of issues recently. We now wait for the final verdict, and an outcome that could potentially result in a severe decline of loyal Prada employees and costumers.

A key point of the article was that Hugh Devlin, a luxury branding consultant, said that China's luxury market will catch up with the West very fast, but is "still relatively immature." He also suggested that “Western brands that look to China as a dumping ground for last season's products will likely not be successful.”

Another interesting finding from the KPMG survey was that “three-quarters of respondents said the financial downturn had little impact on them, while almost half said they expect their spending on luxury goods to be unchanged or to go up." Great news, breath out... particularly as most of the recently released luxury first-quarter revenue and profit figures have maintained continuing positive growth in China.

However, we suppose the luxury brands should not put all their pave wontons into the wok at once… The successful brands are the recognised brands, generally with a heritage or those that have invested years ago in China. New brand entrants have a harder act to follow and need to be informed as to the consumer tastes and how they like to be talked to.

Thursday, 13 May 2010

Some positive local news: Giorgio Armani S.p.A. has signed an exclusive agreement with David Jones to become the only Australian department store to stock Armani Collezioni, Armani Jeans, and Armani leather goods and soft accessories.

According to an article in Ragtrader, “Over the next two years, David Jones plans to open 16 additional Armani Jeans areas, of which there are currently six. It also plans to launch 14 new Emporio Armani accessories and shoe locations, as well as four additional Armani Collezioni areas to add to the current 13.”

Giorgio Armani S.p.A. definitely have their eye on the Australian luxury market. In July last year, Emporio Armani set up shop in Perth with an impressive freestanding store. Click here for our commentary (Emporio Armani Graces Perth With Its Presence).

Image credit: broadsheet.com.au It shows a David Jones’ store in Melbourne.

A Reuters article stated that flawless diamonds and pieces by Cartier, Bulgari and other jewellers sold for several times estimated prices earlier in the week.

David Bennett from Sotherby’s said, “Some 50 percent of lots sold for above their estimate. It's a tremendous result.”

The G.F.C does not seem to have affected rare and exclusive luxury items. What we are enamoured with is the once-in-a-blue-moon sale of a "blue cushion-shaped diamond weighing 7.64 carats," which went under the hammer for 8.93 million Swiss francs to an anonymous buyer... well you would keep it hush hush wouldn't you...

Wednesday, 12 May 2010

First-quarter profits at perfume maker Inter Parfums Inc. have increased 20.7 percent to US $6.6 million, or 22 cents a diluted share, from US $5.4 million, or 18 cents, in the prior-year period, meeting the expectations of Wall Street analysts.

Looking ahead, Jean Madar, chairman and CEO of Inter Parfums Inc., said the firm will begin distributing Montblanc’s “legacy” fragrances on July 1 and are planning a new Montblanc fragrance for 2011. He also confirmed that the firm’s first Burberry cosmetics collection will be launched in a highly limited distribution network in July.

Madar also stated, “We are in discussions with a number of brand owners and … remain confident that we will be able to further expand our portfolio this year.” Click here to read more at WWD.

Recently, MO Luxury has conducted another round of online and in-field research to gauge what is important to the high net worth and existing luxury client, and the aspirational consumer. And the conclusion is, as other research has advised before and many more will advise again, every client wants to be treated with respect, acknowledged sincerely and warmly, provided with the correct product knowledge to ensure their experience (whether this be in-store, web/email or telephone) is professional and both efficient and effective.

Clients want to be treated as a person and not a number, lifetime customer values of fully satisfied clients are worth hundreds of thousands of additional dollars each year to your brand. Why risk not satisfying your clients at all, or only just satisfying your clients, when positive and consistent attitudes from staff, great training and clear and appropriate communication are the keys to creating loyalty.

So that’s why we were interested in this Forbes article, which serves to reinforce the long term relationship. Brands should 'invest' in each client by providing them with time and relevant information, there is an incredibly high probability that reciprocity will be seen, i.e. the client will invest with the brand(s) that show them the most loyalty. Quite apart from the additional future investment positive word of mouth will bring you.

We thought this was an important quote from the article: "That is, they should not be trying to get consumers to make a purchase but, rather, to make an investment. And, to succeed at this, they must treat their clientele (dare I say customers?) precisely like they are making an investment."

Monday, 10 May 2010

Last week, Hermes posted the biggest surge in first-quarter sales of all European luxury goods companies, “pointing to a continued polarisation of the market in which well-established brands crush weaker rivals." (according to Reuters).

We couldn't agree more, it's clearly all about the "H" word... Hermes and heritage have certainly risen to the top with these 1st quarter results. An 18.5 percent increase in sales is significant... another 'H' word, haute mode indeed.

But Hermes' CEO warns whatever you do, don't extrapolate these figures for the full year. Although a couple of the major financial institutions, HSBC and Credit Suisse, believe Hermes’ full year forecast of 5 percent is too conservative. All bodes well thus far for Hermes.

Friday, 7 May 2010

Salvatore Ferragamo SpA, is “totally committed” to the Italian stock market for an eventual initial public offering (IPO), their CEO, Michele Norsa, has revealed.

The Italian brand sustained big losses in 2009, but Norsa firmly believes it is important to maintain their “Italian-ness at all levels, from head to toe.”

The Ferragamo family may sell shares to the public next year, Chairman Ferruccio Ferragamo said in February. JPMorgan Chase & Co., Mediobanca SpA and UBS AG are advising on the IPO, according to Bloomberg.

Luxury Jewellery Heist in LondonThe fine jewellery and watch houses, including Tiffany & Co. and De Beers, at Westfield's newest shopping project at Shepherds Bush in west London were subjected to a violent raid on the 5th of May by a gang armed with sledgehammers.

Four million pounds of valuables are estimated to have been stolen in this daring raid on this already well security controlled precinct. The heist follows a series of attacks on exclusive jewellers and luxury good stores across London. So what’s next? We dread to think. Click here to read more at The Guardian.

Thursday, 6 May 2010

Last week, Louis Vuitton was dubbed the world’s most valuable luxury brand, when it came to brand value (see our earlier report). Now, LV has also been named as Forbes’ second most valuable Platinum Brand.

In their report on Platinum Brands, Forbes identifies 10 luxury brands that are “poised to thrive in better economic times.”The other brands, in order of appearance on the list, included:1. BMW2. LV3. Mercedes-Benz4. Gucci5. Coach6. Hermes7. Chanel8. Rolex9. Cartier10. Porsche

According to this report, Forbes' Beyond The Balance Sheet Department looks at the numbers behind the numbers - or ways of analysing companies that are different from the usual metrics, such as book value and earnings. Click here for more information on how Forbes came up with this list.

Wednesday, 5 May 2010

Yesterday Hermes International jumped 2 percent to 101.65 euros, gaining for a third day. The stock rose after a member of the company’s founding family - Jean-Louis Dumas – died, sparking speculation that the family may be more willing to sell shares.

Antoine Belge, a Paris-based analyst at HSBC, told Bloomberg, “Some people may believe that the other family members will now be more willing to sell. We think the descendants of the founder are still committed to keeping the company independent, especially the fifth-generation members who still control the majority of the voting rights.”

Fashion has collided with sport after Fifa asked Louis Vuitton to create a luxurious trophy case for the World Cup Trophy.

The case is being handmade in LV’s Asnières workshop near Paris, its price tag a closely guarded secret.

According to Fifa, the cup will be brought into the stadium inside its bag and lifted out by a LV ambassador in front of one billion TV viewers.

As LV’s history is in luggage, it is an appropriate (let's not talk about visibility) for Louis Vuitton to create a special case to carry this coveted beauty.

Why was LV chosen? Well according to Antoine Arnault, head of communications for Louis Vuitton, the players “just adore our products.” And when asked about this project, Monsieur Arnault commented, "We try to do things out of the box."

Tuesday, 4 May 2010

A new force has emerged in the luxury industry – ‘the youth quake’ and they’re shaking things up … in a good way!

According to a WWD article, “Affluent young shoppers helped limit the damage to the luxury sector last year and set it on a course for recovery earlier than other parts of the economy.”

The article says the younger, more affluent spender is typically male and between 25 and 44. And that while “these young consumers represent a small segment of the overall luxury demographic, they were the most resilient during the downturn, rebounding the most dramatically.”

Local luxury spendingLuxury spending in Japan and Australia was up 5 percent in 2009, and jumped 18 percent in February and March, according to data collected by American Express Business Insights, the analytics and consulting organisation within American Express.

“We saw luxury fall off pretty quickly, but we thought it would be more sustained,” said Ed Jay, Senior Vice President of Business Insights. “We were surprised it did not fall more through [2009], and we were even more surprised at how quickly it came back.”

Jay attributed “the breakneck reversal in emerging markets and in Australia to the fact that credit availability and the fallout of the U.S. financial markets affected these regions less.”

Monday, 3 May 2010

Some sad news: Hermes’ former chief, Jean-Louis Dumas, has passed away. The 72-year-old died Saturday morning after a long illness, a company spokeswomen confirmed. Dumas was CEO at Hermès International from 1978 until his retirement in 2006. Read more at WWD.

The net income for Hugo Boss has declined 11 percent in the quarter ending March 31 to €56.3 million (AU $80.9 million). Despite this bad news, the Hugo Boss Group reasserted it will “return to growth in 2010.” Read more at WWD.

To end on a high note: Sales of Burberry’s designer fragrances helped perfume maker Inter Parfums Inc. post a 32 percent rise in first-quarter sales. A Bloomberg article reporting on this increase revealed that Lanvin and Van Cleef & Arpels perfumes were also popular.

Who's behind the MO DOWN

Melinda O’Rourke is the founder and Director of MO Luxury, a dynamic, Sydney-based management firm specialising in luxury brands and services. Melinda and her associates at MO work with local and international brands across prestige retail, fashion, fine jewellery, timepieces and specialised services. Melinda is well-connected, well-read, and well-versed in the demands of the luxury market and its client base. Her advice is firmly based in objectivity and ultimately, accountability. Melinda offers constructive counsel and both strategic and creative thinking and is able to draw upon a strong network of specialised talent to compliment the MO Luxury team as needed. Melinda enjoys excellent industry relationships and is regularly quoted in the business and fashion media. Read more about MO Luxury, www.moluxury.com.au